Big banks tone down sales incentives
Big banks have altered the incentive schemes pressuring staff into selling financial products, but First Union says they haven’t gone far enough.
Bank staff in branches and call centres used to be set hard dollar targets for the different product lines they had to sell, such as loans, KiwiSaver and insurance to customers, or risk missing out on bonuses.
They also risked being put into humiliating and stressful ‘‘performance management’’.
Following the publication of the damning Sedgwick report in Australia last year, the banks have toned down the incentive schemes, which have been blamed for a toxic sales-driven culture in Australian banks.
Banks now use a ‘‘balanced scorecard’’ approach, taking more account of things such as customer feedback.
But Stephen Parry from First Union said the changes had not tackled the ‘‘toxic’’ sales-driven culture of the banks, and he called for an inquiry and and for all sales targets for bank staff to be outlawed.
‘‘A royal commission would give the public confidence that the interests of consumers and finance sector workers are properly balanced against the profit motive of New Zealand’s private-sector banks, particularly in light of the indiscretions of their parent companies in Australia,’’ Parry said.
Karen Scott-Howman from the New Zealand Bankers’ Association (NZBA) said the changes to incentive schemes reflected banks’ commitment to ‘‘continuous improvement’’.
She said all the major New Zealand banks had committed to implementing the recommendations of the Sedgwick report.
The Sedgwick report was about Australian banks, but their New Zealand subsidiaries ASB, ANZ, Bank of New Zealand and Westpac used similar incentive schemes, Parry said.
‘‘There has been quite a bit of movement over the last year away from a really explicit sales culture towards a more nuanced approach.’’
The banks had abolished dollarbased targets for each of a number of specific products such as KiwiSaver, home loans, credit cards and overdrafts, where failing to hit one of the targets effectively meant failing on all.
In their place was a ‘‘balanced scorecard’’ approach, where sales accounted for about 25 per cent of targets, and the rest was based on factors such as customer feedback.
However, despite the changes, one core thing had not changed. ‘‘If you don’t meet your targets, you don’t get your bonus,’’ Parry said.
‘‘The bonus only accounts for 5 [per cent] to 10 per cent of the remuneration of a bank worker, but it still informs the culture.’’
He said sales targets were not good for bank workers, or Kiwis’ wallets. ‘‘Our members regularly report ... being uncomfortable about having to offer products which consumers do not necessarily need or want.’’